Regulatory News:
Air Liquide (Paris:AI)
H1 2017 Key figures
H1 2017 highlights
As published(1)
-- Group Revenue
10,293 million euros
+28.4%
-- New contracts: long-term
contracts in Belgium forsteelmaking, in China for fiber optics and
electronics, inOman for petrochemicals; major Engineering
&Construction contract in China for the energy sector.
-- Net Income (Group share)
928 million euros
-- Cash Flows after changes in
WCR
+14.5%
+31.2%
-- Industrial Merchant
recovering.
-- Business portfolio management:
sale of Air LiquideWelding to Lincoln Electric expected to be
finalized July 31,and acquisitions in Healthcare (France and
Colombia).
Adjusted growth(2)
-- Group revenue
-- Gas & Services revenue
+5.7%
+6.9%
-- Innovation: 3 new investments in
start-ups and initiativesin the field of diabetes.
Comparable growth(3)
-- Gas & Services revenue
-- Group operating margin
+2.8%
+70 bps(4)
1) 2016 restated, Welding and Diving
activities reported as discontinued operations.
2) Variation H1 2017 vs. restated H1 2016,
adjusted as if on January 1, 2016 Airgas had been fully
consolidated and the divestments required by US competition
regulators had been completed.
3) Variation H1 2017 vs. adjusted H1 2016,
excluding currency and energy (natural gas and electricity)
impacts.
4) Excluding energy impact, vs adjusted H1
2016.
Commenting on the first six months of 2017, Benoît Potier,
Chairman and CEO of Air Liquide, said:
"The Group's performance in the first half of 2017 was solid,
with further growth in revenue and net profit, as well as an
improvement in the operating margin. Sales benefited from the end
of the Airgas consolidation effect and positive currency and energy
impacts.
The Gas & Services business continued to improve during
the first half of the year, benefiting from the confirmed recovery
in Industrial Merchant, strong volumes in Large Industries, a good
underlying level of activity in Electronics, and continuous
development in Healthcare. Global Markets & Technologies sales
continued to grow by double digits. Geographically, all regions are
generating growth, with Industrial Merchant and Healthcare
activities particularly dynamic in developing economies.
The Group's operational performance also improved further in
the first half of 2017: the new efficiencies and synergies
associated with Airgas contributed to the higher operating margin
and net profit. Lastly, the Group's balance sheet remains robust,
benefiting from strong growth in cash flows and well controlled
debt.
Investment decisions continued during the first half of the
year, and the Group can rely on €2.0 billion investment backlog to
support its future growth. With Airgas now fully integrated, Air
Liquide is focused on executing its mid-term strategic
plan.
Assuming a comparable environment, Air Liquide is confident
in its ability to deliver net profit growth in 2017."
Group revenue for the first half of 2017 grew by
+28.4% to reach 10,293 million euros,
benefiting from the consolidation of Airgas sales for the entire
semester. Adjusted1 for major changes in the portfolio, the first
half revenue growth was +5.7%.
On a comparable growth basis,2 Group revenue increased by +1.8%
over the first six months, to which are being added a positive
currency effect of +1.7% and a favorable energy impact of +2.2%.
Growth in the second quarter of 2017, which was +2.0% on a
comparable basis, is slightly higher than in the first quarter of
2017. Gas & Services sales rose steadily, while Engineering
& Construction remained weak in a challenging environment.
Gas & Services sales reached 9,978 million
euros for the first half of 2017, up +31.0% as
published. On a comparable basis, growth was +2.7% in the second
quarter, in line with the first quarter, despite a highly
unfavorable impact of working days in Europe.
All Gas & Services activities contributed to sales
growth over the first six months of this year, in particular
Industrial Merchant:
- Industrial Merchant experienced
a solid growth of +2.8%, driven by all economic sectors. The
improvement observed in the first quarter of 2017 in North America
and Europe is confirmed and includes both bulk and cylinder
volumes. In Asia, sales also increased in the second quarter,
particularly in China, where double-digit growth was recorded, and
in Japan. In developing economies, revenue rose by +7.2%. Globally,
the price effect for the period reached +1.2%, and is slightly
positive in Europe after two years of decline.
- Large Industries revenue grew by
+2.2% and was contrasted among geographic zones. Demand
remained strong in North America. Sales were down in Europe,
reflecting temporary maintenance turnarounds and the end of
operations in Ukraine, although volumes were improving sequentially
to meet demand from refineries and steelmakers. Sales from
cogeneration were lower due to decreasing electricity prices in
Europe and North America. In Asia, growth was driven by the ramp-up
of an air separation unit in Australia and strong demand in Japan,
Singapore, and South Korea. China was impacted by temporary
customer maintenance turnarounds. In the Middle East, the Yanbu
hydrogen production site in Saudi Arabia is running at full
capacity and Egypt benefited from the start-up of a new unit.
- Electronics sales were stable at
+0.4%, compared to the high first half of 2016, which saw
strong sales of equipment and installations. Excluding sales of
equipment and installations, activity remained dynamic, growing by
+7%, especially in the United States and Asia. In Taiwan and China,
growth came in above +10%. Demand for advanced molecules continued
to be strong, with double-digit sales growth.
- Healthcare revenue, up
+4.5%, continued its development, driven by the steady
growth of Home Healthcare, Hygiene, and Specialty Ingredients. In
the Americas, Home Healthcare is progressing strongly in Canada,
Brazil, and Argentina. In Europe, sales were impacted by less
working days for medical gases in the second quarter and a weak
contribution from complementary acquisitions. However, Home
Healthcare remained dynamic there, particularly in the field of
diabetes. The development of Hygiene and Specialty Ingredients
continued across the globe at a steady pace. In the developing
economies, Healthcare sales continued to increase, with strong
growth of +18% for the first six months of 2017.
Engineering & Construction sales stood at 146
million euros for the first six months of the year, down
-43.3% on a comparable basis due to the low level of
order intake in 2016. The overall environment remains difficult,
but is showing signs of improvement. Order intake, particularly for
the Chemicals and Energy sectors in China, increased significantly
over the period to reach 329 million euros.
Global Markets & Technologies continued to develop,
reporting comparable growth for the first six months of
+16.4%, with sales of 169 million euros. The biogas
and space segments were particularly dynamic.
________
____________________
1 Variation H1 2017 vs. restated H1 2016, adjusted as if on
January 1, 2016, Airgas had been fully consolidated and the
divestments required by the US competition regulators had been
completed.2 Comparable variation H1 2017 vs. adjusted H1 2016,
excluding currency and energy (natural gas and electricity): 2016
base restated, adjusted as if on January 1, 2016, Airgas had been
fully consolidated and the divestments required by the US
competition regulators had been completed.
The Group continues to reinforce its competitiveness.
Efficiency gains reached 148 million euros for the
first six months of this year, in line with the target of more than
300 million euros a year. In addition, the synergies related
to Airgas have reached a cumulative total of 138 million USD since
the acquisition, in line with the Group’s forecasts. Accordingly,
the Group’s operating margin, excluding the impact of
energy, improved by +70 bps on a comparable basis, reaching
16.5%.
Net profit (Group share) reached 928 million
euros, up +14.5% on a published basis, and Net
earnings per share increased +4.3% after taking into
account the dilutive impact of the 2016 capital increase.
Cash flow (after changes in Working Capital Requirements)
is up by +31.2%. Debt-to-equity ratio as of June 30,
2017, adjusted for the seasonality of the dividend and exchange
rates, is stable at 90%.
H1 2017 Performance
In millions of euros
H1 2017/2016
as published1
H1 2017/2016
adjusted2
H1 2017/2016
adjustedcomparable3
Group revenue
of which Gas & Services
10,293 M€
9,978 M€
+28.4%
+31.0%
+5.7%
+6.9%
+1.8%
+2.8%
Operating income recurring 1,656 M€ +21.2%
- -
Net profit (Group share) 928 M€
+14.5% - -
Net debt as of 06.30.2017
15,610 M€ - - -
1 2016 restated, Welding and Diving activities reported as
discontinued operations.2 Variation H1 2017 vs. restated H1 2016,
adjusted as if on January 1, 2016, Airgas had been fully
consolidated and the divestments required by the US competition
regulators had been completed.3 Comparable variation H1 2017 vs.
adjusted H1 2016, excluding currency and energy (natural gas and
electricity) impacts: 2016 base restated, adjusted as if on January
1, 2016, Airgas had been fully consolidated and the divestments
required by the US competition regulators had been completed.
________
The Air Liquide Board of Directors met on July 27, 2017.
During this meeting, the Board reviewed the consolidated financial
statements for the first half ending June 30, 2017.
Limited review procedures were completed with respect to the
consolidated interim financial statements, and an unqualified
review report is in the process of being issued by the statutory
auditors.
In addition, as announced on the occasion of the publication of
the 2016 annual results, the Group confirms that it will
distribute one free share for every 10 shares held. The new
shares will be allocated on October 4, 2017, and the price
adjustment will be made on October 2, 20171.
__________________
1 Attribution modalities and detailed calendar are available on
airliquide.com/shareholders.
The slideshow that accompanies this press
release will be available starting at 8:45 am (Paris time) on the
Air Liquide corporate website: airliquide.com.
Follow the announcement of first-half
results live on Twitter @AirLiquideGroup
UPCOMING EVENTSFree share attribution dateOctober
4, 2017
3rd quarter 2017 revenueOctober 25,
2017
Actionaria trade show, Paris, FranceNovember 23-24,
2017.
The world leader in gases, technologies
and services for Industry and Health, Air Liquide is present in 80
countries with approximately 67,000 employees and serves more than
3 million customers and patients. Oxygen, nitrogen and hydrogen are
essential small molecules for life, matter and energy. They embody
Air Liquide’s scientific territory and have been at the core of the
company’s activities since its creation in 1902.
Air Liquide’s ambition is to lead its
industry, deliver long-term performance and contribute to
sustainability. The company’s customer-centric transformation
strategy aims at profitable growth over the long term. It relies on
operational excellence, selective investments, open innovation and
a network organization implemented by the Group worldwide. Through
the commitment and inventiveness of its people, Air Liquide
leverages energy and environment transition, changes in healthcare
and digitization, and delivers greater value to all its
stakeholders.
Air Liquide’s revenue amounted to €18.1
billion in 2016 and its solutions that protect life and the
environment represented more than 40% of sales. Air Liquide is
listed on the Euronext Paris stock exchange (compartment A) and
belongs to the CAC 40, EURO STOXX 50 and FTSE4Good indexes.
H1 2017 Results
Management Report
H1 17 PERFORMANCE
2
H1 2017 Keys figures
3
H1 2017 Highlights
4
H1 2017 Income Statement
7
Change in Net Indebtedness
14
INVESTMENT CYCLE
15
RISK FACTORS
16
2017 OUTLOOK
16
APPENDIX
17
Currency, energy and significant scope
impacts (Semester)
17
Currency, energy and significant scope
impacts (Quarter)
18
2nd quarter 2017 revenue
19
Segment information
20
Consolidated income statement
21
Consolidated balance sheet
22
Consolidated cash flow statement
23
Revenue and adjusted 2016 Operating Income
Recurring
25
Return on Capital Employed – ROCE
26
H1 17 PERFORMANCE
With Airgas now integrated, Air Liquide focuses on executing its
mid-term strategic plan. The Group’s performance was solid in H1
17, with further growth of sales and net profit, as well as an
improvement of the margin.
Group revenue for H1 17 reached 10,293 million
euros, up +28.4% as published, thanks to the
consolidation of Airgas over a full semester. Comparable growth was
+1.8%, to which is being added a positive currency impact of
+1.7% and a favorable energy impact of +2.2% resulting in +5.7%
growth to adjusted 2016 sales. This was driven by a steady
improvement in Gas & Services sales and the dynamic momentum of
Global Markets & Technologies, but was impacted by a weak level
of activity in Engineering & Construction. Gas &
Services revenue amounted to 9,978 million euros,
up +31.0% as published and +2.8% on a comparable
basis. H1 2017 saw confirmation of a recovery in Industrial
Merchant, an activity which now accounts for almost half of Gas
& Services sales. Growth was also driven by solid Large
Industries volumes, consistent development in Healthcare and a
return to growth for Electronics. In terms of geography, all zones
posted growth.
Continuous efforts to reduce costs led to 148 million
euros in efficiencies, in line with the annual target of more
than 300 million euros. In addition to these recurrent
efficiency gains, Airgas synergies totaled 93 million US
dollars since the beginning of the year and reached cumulated
138 million US dollars since the acquisition of
Airgas. The operating margin was 16.5% excluding the
energy impact, a 70 basis point improvement compared with
the adjusted margin for H1 16. Net profit (Group share) rose
to 928 million euros, an increase of +14.5%. Earnings
per share were up +4.3% compared with H1 16, after taking into
account the dilutive impact of the October 2016 capital
increase.
Cash flow from operating activities after changes in working
capital requirements amounted to 1,593 million
euros, up +31.2%, and exceeded sales growth which stood at
+28.4%. Net indebtedness at the end of June 2017 amounted to
15.6 billion euros.
The 12-month portfolio of investment opportunities remained
stable at 2.1 billion euros at the end of June 2017.
Investment decisions totaled 1.1 billion euros.
Net capital expenditures represented 11.3% of sales and were in
line with the mid-term strategic plan.
Terms « published » and « comparable » used
in this document refer to the definitions below :
- Published
growth vs 2016 data is calculated in accordance with
IFRS 5. Other Activities (Aqua Lung and
Air Liquide Welding) are reported under “Net income from
discontinued operations” in the 2016 and 2017 income statement. The
Balance Sheet also presents Assets and Liabilities held for sale
under a dedicated line.
- Adjusted 2016
revenue and operating income recurring are computed as
if, on January 1st 2016, Airgas had been fully consolidated
and the divestitures requested by the U.S. Federal Trade Commission
completed, and Aqua Lung and Air Liquide Welding had
been deconsolidated.
- Comparable
growth: in 2017, Air Liquide will communicate a
comparable sales growth based on 2016 adjusted sales, excluding
currency and energy (natural gas and electricity) impacts.
- Reference to
Airgas now corresponds to the Group’s Industrial
Merchant and Healthcare activities in the United States within
the new scope, after the merger of Airgas and
Air Liquide U.S. operations.
Unless otherwise stated, all variations in revenue and operating
income recurring outlined below are on a comparable
basis.
H1 2017 Keys figures
(in millions of euros)
H1
2016 H1 2017
2017/2016publishedchange
2017/2016 adjustedcomparable
(a)
Total Revenue 8,018
10,293 +28.4% +1.8% Of which Gas
& Services 7,618 9,978 +31.0% +2.8%
Operating income recurring 1,367 1,656 +21.2%
+6.0% Operating income recurring (as % of revenue)
17.0% 16.1% -90bps Other non-recurring
operating income and expenses (84) (2)
Net profit (Group share) 811 928
+14.5%
Earnings per share (in euros)(b)
2.30 2.40 +4.3%
Net cash flows from operating activities (c) 1,215
1,593 +31.2% Net capital expenditure
(d) 13,105 1,162 Net debt
19,860 15,610
Debt-to-equity ratio (e) 151% 90%
Return On Capital Employed – ROCE after tax
(f) 8.3% 7.4%
(a) Comparable growth based on 2016
adjusted sales excluding currency and energy price fluctuation
impact.
(b) H1 2016 Earnings per share restated
for the impact of the preferential subscription rights allocated to
shareholders aspart of the capital increase carried out in October
2016.
(c) Cash flow from operating activities
after changes in working capital requirements and other
elements.
(d) Including transactions with minority
shareholders.
(e) Adjusted to spread the dividend
payment in H1 out over the full year and of change impact.
(f) Return on capital employed after tax:
see definition in appendix.
H1 2017 Highlights
INDUSTRIAL DEVELOPMENT
Large Industries
- In early January 2017, Air Liquide and
ArcelorMittal, signed long-term contracts for the
supply of oxygen, nitrogen and argon to ArcelorMittal’s production
sites in Benelux and France.
- In January 2017, Air Liquide announced
having recently commissioned the largest hydrogen storage
facility in the world. This underground cavern is located in
Beaumont, Texas, in the Gulf Coast region of the U.S. This unique
hydrogen storage cavern complements Air Liquide’s robust supply
capabilities along the Gulf Coast, offering greater flexibility and
reliable hydrogen supply solutions to customers via Air Liquide’s
extensive Gulf Coast Pipeline System. This facility is 1,500
meters deep and nearly 70 meters in diameter and is
capable of holding enough hydrogen to back up a large-scale
steam methane reformer (SMR) unit for 30 days.
- Air Liquide inaugurated on January 26th
in France, in the frame of the Connect project, an operation
center that is unique in the industrial gas sector. It enables the
remote management of production for 22 of the Group’s units
in France, optimizing their energy consumption and improving their
reliability. With “technological showcase” certification
from the Industry of the Future Alliance, Connect represents an
investment of €20 million. This project is based on the
implementation of new digital technologies at French production
sites and on the creation of new skills.
- In early April, Air Liquide and Oman
Oil Refineries and Petroleum Industries Company (Orpic), Oman’s
national refining company, signed a long-term agreement for
the supply of nitrogen to the Liwa Plastics Industries Complex
(LPIC), a new plastics production complex including the country’s
first steam cracker Orpic is adding to its existing production
facilities, in Sohar industrial port area in Oman. Investing around
€20 million to build a state-of-the-art nitrogen production
unit with a total capacity of 500 tons of nitrogen per day, Air
Liquide will strengthen its leadership position in a key industrial
area to support the growth of its customer Orpic.
Industrial Merchant
- In June 2017, Air Liquide announced new
supply contracts covering a period of 10 to 15 years with
three major Chinese fiber optics manufacturers. In the frame
of these new contracts with Futong Group Communication Technology,
Yangtze Optical Fibre, and Zhongtian Technology Fine Materials,
Air Liquide will supply a total exceeding 6,000 Nm3 per
hour of hydrogen and 4,000 Nm3 per hour of nitrogen via
on-site generator solutions, together with bulk oxygen, helium,
argon and carbon dioxide. Air Liquide will thus support the
further development of China’s fiber optics industry.
Engineering & Construction
- In May 2017, Air Liquide
Engineering & Construction announced it had recently signed a
major contract amounting to around €100 million to
design and build three Air Separation Units (ASU) for
Yankuang Group, one of the largest energy and chemical companies in
China. Each of the ASUs will have a production capacity of
3,200 tonnes per day of oxygen, plus nitrogen for the
production of methanol-based chemicals, an additive widely used in
the energy industry to increase combustion efficiency of
hydrocarbon. The new ASUs will be built by using Air Liquide’s
latest innovative technologies expertise and best in class
standards to ensure a safe, optimized and reliable operation of the
plants. All three ASUs will start operation in the second half
of 2019.
DEVELOPMENTS IN HEALTHCARE
- Air Liquide pursued its external growth
strategy in Healthcare. The Group’s subsidiary Seppic, designer and
supplier of specialty ingredients for health and beauty, recently
finalized the acquisition of the Serdex division of Bayer.
This acquisition strengthens Seppic’s footprint in natural
active ingredients for cosmetics. The global specialty active
ingredients for cosmetics represent a market over €900 million, of
which natural active ingredients are a fast growing segment.
- The Group announced on January 24th the
acquisition of Oxymaster, a national home healthcare
sector player in Colombia. Present in the Colombian market for
almost 20 years, Oxymaster is specialized in home treatment and
support for patients suffering from respiratory conditions
(sleep apnea, Chronic Obstructive Pulmonary Disease, chronic
respiratory failure). Oxymaster has more than 240 employees and
serves over 21,000 patients. The company generated revenues of
approximately €9 million in 2016.
- Air Liquide strengthens its
position in home care for patients with diabetes and
participates in the French artificial pancreas project. By
signing a partnership with CERITD, the French Center for Studies
and Research for the Intensification of Diabetes Treatment,
Air Liquide continues the approach based on cooperation
between hospital teams and homecare nurses. In addition, to
increase its level of expertise in the field of diabetes and
support innovation, Air Liquide has acquired an equity stake via
ALIAD, the Group’s venture capital investment arm, in the French
start-up Diabeloop, which is designing an electronic
artificial pancreas composed of an insulin pump in the form of
a patch and a glucose sensor both connected. The investment made by
Air Liquide in Diabeloop confirms the Group’s commitment to
digital technologies and healthcare, in the aim of helping
patients achieve a better quality of life and care.
PROJECTS IN INNOVATION AND TECHNOLOGY
- Air Liquide and 12 leading energy,
transport and industry companies have launched on January 17th, a
global initiative to voice a united vision and long-term ambition
for hydrogen to foster the energy transition. In the first global
initiative of its kind, the ‘Hydrogen Council’ is determined
to position hydrogen among the key solutions of the energy
transition and aims to promote hydrogen to help meet
climate goals.
- In March, Air Liquide completed the
construction of two hydrogen charging stations in Japan. The
Fukuoka Miyata and Kobe Shichinomiya stations are respectively the
4th and 5th hydrogen charging stations for public use in
Japan. To date, 75 hydrogen charging stations have already been
designed and installed by Air Liquide worldwide.
- ALIAD, Air Liquide’s venture
capital investment arm, continues to gain strength in the
industries of the future with three new equity investments
in technology start-ups, UBleam and Dietsensor, and in the
investment fund Investisseurs & Partenaires. With these new
equity investments in addition to its further financial commitment
to six companies in which it has already invested before, ALIAD has
committed more than €10 million to start-ups since the start
of 2017. The investment strategy of ALIAD targets sectors linked to
the energy transition, health and digital. ALIAD also
supports these start-ups that are developing the technologies of
the future by rolling out R&D and/or business partnerships with
Group entities.
NEW VISUAL IDENTITY
- The acquisition of Airgas and the
launch of the NEOS Company Program for the period 2016-2020 mark a
new milestone in the history of Air Liquide. The Group is
transforming and is changing its visual identity with a new
logo, the fifth since the company was founded 115 years ago.
This new visual identity introduced in January 2017, which embodies
the transformation of Air Liquide, is that of a leading Group,
expert and innovative, that is close to its stakeholders and open
to the world.
BOND ISSUE
- A transaction, issued under the Group’s
€12 billion Euro Medium Term Note (EMTN) program, allowed the
issuance of a €600 million bond with a 10-year
maturity at a yield of 1.116%. This recent transaction
brought the total outstanding amount of bonds issued to
approximately €15.2 billion, with an average maturity of 6.8 years.
Proceeds from this bond allow the Group to refinance its two bonds
maturing in June and July 2017, and to continue funding sustainably
its long-term growth while benefiting from very attractive market
conditions.
PORTFOLIO MANAGEMENT
- On April 27, 2017, Air Liquide
announced it signed an agreement with Lincoln Electric
France SAS, subsidiary of Lincoln Electric Holdings, Inc. (“Lincoln
Electric”) (Nasdaq: LECO), to sell
Air Liquide Welding, its subsidiary specialized in
the manufacture of welding and cutting technologies. This agreement
follows the exclusive negotiations agreement announced on March
2, 2017 with Lincoln Electric, the world leader in design,
development and manufacture of arc welding products, robotic arc
welding systems, plasma and oxy-fuel cutting equipment. Both
parties having now obtained the necessary regulatory approvals, the
transaction will be completed on July 31, 2017.
H1 2017 Income Statement
INCOME STATEMENT
Revenue
(in millions of euros)
H1 2016 H1 2017
2017/2016publishedchange
2017/2016 comparable
change
Gas & Services 7,618 9,978 +31.0%
+2.8% Engineering & Construction 254 146
-42.7% -43.3% Global Markets & Technologies
146 169 +15.8% +16.4%
TOTAL
REVENUE 8,018 10,293
+28.4% +1.8%
Group
Group revenue in the 1st half of 2017 totaled
10,293 million euros, up +28.4% as published
compared to the 1st half of 2016. Comparable growth was
+1.8%, to which are being added positive currency impact of
+1.7% and favorable energy impact of +2.2% resulting in +5.7%
growth to adjusted 2016 sales. The currency and energy impacts
remained positive in the 2nd quarter of 2017, but eased
compared with the 1st quarter of 2017. Comparable growth was
driven by a steady improvement in Gas & Services sales, but was
affected by a weak activity level in Engineering &
Construction.
Revenue by quarter
(in millions of euros)
Q1 2017 Q2 2017 Gas &
Services 5,046 4,932 Engineering & Construction
53 93 Global Markets & Technologies 77
92
TOTAL REVENUE 5,176
5,117 2017/2016 published change +38.5%
+19.5% 2017/2016 comparable
+1.5% +2.0%
Gas & Services
Gas & Services revenue totaled 9,978 million
euros, up +31.0% as published compared with the
1st half of 2016. Comparable growth was +2.8%, to which
are being added a positive currency impact of +1.8% and a favorable
energy impact of +2.3% resulting in +6.9% growth to adjusted 2016
sales. This was driven in particular by steady sales growth in
Industrial Merchant, at close to +3% over the half-year.
(in millions of euros)
H1 2016 H1 2017
2017/2016 published
change
2017/2016 comparable
change
Americas 2,185 4,251 +94.5%
+3.3% Europe 3,225 3,371 +4.6% +2.0%
Asia-Pacific 1,920 2,032 +5.9% +2.8%
Middle East & Africa 288 324 +12.4%
+3.5%
GAS & SERVICES REVENUE 7,618
9,978 +31.0% +2.8% Large
Industries 2,388 2,694 +12.8% +2.2%
Industrial Merchant 2,964 4,757 +60.5%
+2.8% Healthcare 1,451 1,690 +16.5%
+4.5% Electronics 815 837 +2.8% +0.4%
Americas
Gas & Services revenue in the Americas zone amounted to
4,251 million euros, up +95% as published
following the integration of Airgas and up +3.3% on a
comparable basis. In Large Industries, sales were up markedly
(+5.1%) in the 1st half and in particular in the
1st quarter. The recovery was confirmed in Industrial
Merchant, with revenue growth of +3.3% over the half-year and an
increase of +4.0% during the 2nd quarter. In South America,
sales continued to improve significantly, notably in Large
Industries and Healthcare.
- Large Industries posted a sharp
+5.1% growth in sales in H1, with more modest growth in the
2nd quarter. In North America, air gases volumes were up +4.7%
over H1 2017 with record levels of oxygen delivered in the United
States in June 2017. In the 2nd quarter, hydrogen volumes were
impacted by maintenance turnarounds and sales from cogeneration
units were down due to the fall in electricity prices in North
America. In Latin America, new units contributed to the dynamic
growth momentum.
- The recovery in Industrial
Merchant was confirmed, with sales growth of +3.3% over
the 1st half and +4.0% in the 2nd quarter. Liquid gas and
cylinder volumes were up in the United States and Canada. Sales
improved in almost all market segments. In the United States they
progressed particularly in Food, Pharmaceuticals, Materials,
Energy, Professionals and Retail. In Canada, they increased
markedly in Energy with a rebound in oil services and related
industries. Activity in South America continued its dynamic
momentum. The price impact in the zone was +1.7% over the
half-year.
- Healthcare revenue was up
+4.2%, driven by solid activity in Canada and South America
where Home Healthcare was enjoying sustained growth.
- Electronics revenue declined
-4.3% due to weak Equipment & Installation sales in the
2nd quarter of 2017. Gas sales remained dynamic, in particular
in Advanced Materials which continued to post double-digit
growth.
Europe
Revenue in Europe zone totaled 3,371 million euros,
up +2.0%. Despite solid volumes, Large Industries sales
remained down at -1.4%, due to customer maintenance turnarounds and
the stoppage of activity in Ukraine. The recovery in Industrial
Merchant was confirmed with growth of +2.7% over H1; during the
2nd quarter, despite a very unfavorable working day impact,
growth remained positive at +1.2%. Healthcare continued to improve
steadily (+4.2%), with limited contribution to growth from bolt-on
acquisitions.
- Large Industries revenue was
down -1.4% over H1, penalized by customer maintenance
turnarounds. Nevertheless, sales improved on a sequential basis:
Air gases benefited from increased demand from steel producers
(France, Germany, Italy) and hydrogen from the good activity level
at refineries. Sales in Eastern Europe continued to grow, but were
impacted by the stoppage of activity in Ukraine.
- Industrial Merchant revenue was
up +2.7% over the half-year, with the recovery in most
countries confirmed, especially in Southern Europe (Iberia, Italy)
and Benelux. Liquid gas and cylinder volumes were up over the
half-year. Sales per working day continued to increase in the
2nd quarter. The Food & Pharmaceuticals and the Materials
& Energy market segments continued to improve. Growth was more
limited for the Professionals and Retail segment with low volumes
for gas cylinders in particular due to the negative working day
impact in the H1 17. Developing economies continued to enjoy
sustained sales growth, in particular in Russia, Poland and Turkey.
Following two years of decline, pricing returned to slightly
positive territory in the region in the 2nd quarter and were
flat over the half-year.
- Healthcare continued to improve
steadily posting sales growth of +4.2%, with new
acquisitions having a limited contribution. Home Healthcare sales
continued to grow with an increase in the number of patients.
Revenue from medical gases for hospitals was affected in the
2nd quarter by an unfavorable working day impact. Sales in the
Hygiene and Specialty Ingredients activities grew significantly,
driven by bolt-on acquisitions.
Asia-Pacific
Revenue in the Asia-Pacific zone totaled 2,032 million
euros and climbed +2.8% in the 1st half-year and at
a faster pace in the 2nd quarter, at +4.0%. Solid growth was
achieved across all business lines. In Large Industries, sales were
up +3.9% in the 1st half-year, driven by the loading of a new
unit and strong volumes. Industrial Merchant grew strongly in the
2nd quarter (+4.0%) with double-digit growth in China and an
improvement in activity in Japan. Electronics sales saw a return to
growth, up +4.5% in the 2nd quarter, thanks to continued
underlying activity momentum.
- Large Industries sales were up
+3.9%, driven by the ramp-up of a new unit in Australia and
by strong customer demand notably in South Korea, Singapore and
Japan. Several customer maintenance turnarounds affected growth in
China in the 2nd quarter.
- Industrial Merchant improved
+1.7% over the half-year, and enjoyed a strong
2nd quarter at +4.0%. In China, growth exceeded +15% in the
2nd quarter, driven by increases in volumes and liquid gas
prices (in particular nitrogen, argon) and by the very strong
growth in gas cylinders volumes (oxygen, argon). In Japan, after a
negative comparison effect for Equipment & Installation sales
in the 1st quarter, revenue climbed in the 2nd quarter thanks
to an improvement in Industrial Production. In Singapore, sales
were compared to high Equipment & Installation revenue seen in
the 2nd quarter of 2016. Business in Australia was down
slightly in a challenging environment. Pricing rose and were
positive at +0.4% in the 1st half-year.
- Electronics revenue was up
+1.7% over the half-year, with a strong 2nd quarter at
+4.5%, driven in particular by double-digit sales growth in China
and Taiwan. Underlying activity momentum was strong, climbing more
than +10% in the 2nd quarter, in particular thanks to Advanced
Materials, carrier gases and services. Nevertheless, the basis of
comparison was unfavorable, with Equipment & Installation sales
extremely high in the 1st half of 2016. In the
2nd half-year, the basis of comparison with 2016 should be
more favorable.
Middle East and Africa
Middle East and Africa zone revenue amounted to 324 million
euros, an increase of +3.5% on a comparable basis. In
the 2nd quarter, sales benefited from the fact that two large
hydrogen production units in Yanbu, Saudi Arabia are operating at
full capacity. In Egypt, pre-loading of production units
contributed to growth in Large Industries and Industrial Merchant.
South Africa continued to enjoy sustained growth in Healthcare.
Engineering & Construction
Engineering & Construction revenue totaled
146 million euros in the 1st half of 2017, down
-43.3% compared with the 1st half of 2016, due to the
low level of order intake in 2016. Business nonetheless improved
sequentially during the 1st half-year.
Order intake reached 329 million euros in the 1st half
of 2017, up +161% compared with the 1st half of 2016. More
than 80% of all orders concerned air gas units (ASU). These mainly
included Group projects and orders on behalf of third parties in
the Energy and Chemicals sectors in China and South Korea. The
number of tenders continued to increase.
Global Markets & Technologies
Global Markets & Technologies revenue was up +16.4%
at 169 million euros. Sales were particularly dynamic
in the biogas and space sectors. Helium sales increased in the
2nd quarter despite logistical challenges relating to the
geopolitical context in Qatar.
Order intake totaled 148 million euros in the 1st half
of 2017.
OPERATING INCOME RECURRING
Operating income recurring before depreciation and
amortization totaled 2,556 million euros, up +22.6%
as published compared to H1 16. This reflected the integration of
Airgas.
Purchases were up +33.6%, at a faster pace than published sales
growth at +28.4%: this difference was due to trading activity
(hardgoods sales) at Airgas which is greater than at
Air Liquide. Personnel costs also grew at a faster pace
(+32.3%) than sales, mainly due to the change in business mix.
Indeed, Industrial Merchant, which now accounts for close to half
of Group sales, requires more staff than other activities such as
Large Industries. However, other expenses increased at a slower
pace (+21.7%), as Airgas’ structure is leaner, for example has no
Research and Development department.
Depreciation and amortization reached 900 million
euros, up +25.4%. This also increased at a slower pace than
sales as the relative weighting of Industrial Merchant, a business
with lower capital intensity than Large Industries, is now larger
within the Group’s business lines.
Over the first six months of the year, efficiencies
amounted to 148 million euros, up +3.5% and in line
with the annual target of over 300 million euros. More than 40% of
these efficiencies related to industrial projects (optimization of
production units particularly in China and Benelux, logistics, and
maintenance), more than one third to purchasing gains (energy in
Large Industries, molecules in Electronics), and the balance mainly
to administrative efficiencies and restructuring. Large Industries
and Industrial Merchant were the Business Lines generating most of
the efficiencies and accounted for almost two thirds of total
efficiencies.
Airgas synergies continued to materialize: these
represented 93 million US dollars in H1 2017 and
cumulated 138 million US dollars since the
acquisition of Airgas in 2016. Cost synergies are divided into four
main categories: cylinder operations where more than 90% of site
closures and restructuring have been completed; liquid gas
operations where the entire logistics of liquid products are being
optimized; the review of processes where best practices are being
implemented and procurement where contracts are renegotiated; and,
finally, the back office, where more than 90% of duplicate
positions have already been eliminated. Revenue synergies have
started to materialize with better availability of bulk products
and new offers proposed to customers.
The Group’s operating income recurring (OIR) reached
1,656 million euros in H1 17, up +21.2% as published
and up +6.0% versus H1 16 adjusted OIR. The operating margin
(OIR to revenue) was up +30 basis points on a comparable basis at
16.1% compared with H1 16 adjusted operating margin. Excluding
the energy impact, H1 17 operating margin was up +70 basis
points at 16.5% compared to the adjusted H1 16 operating margin
and in line with the Group’s objective to improve
profitability.
Gas & Services
Gas & Services operating income recurring amounted to
1,761 million euros, an increase of +20.7%. The OIR margin
as published was 17.6%. Excluding the energy impact, the operating
margin stood at 18.1%.
Against a backdrop of limited global inflation, average selling
prices were up +0.6% due in particular to Industrial Merchant
(+1.2%). Prices were slightly down in Electronics and pricing
pressure in Healthcare continued in certain countries.
Efficiencies totaled 136 million euros in H1 2017 for
Gas & Services activity.
Gas & Services Operating margin (a)
H1 2016 H1 2017 Americas 19.7%
15.8% Europe 19.8% 18.9% Asia-Pacific
18.0% 19.7% Middle-East & Africa 15.5%
16.4%
TOTAL 19.2% 17.6%
(a) Operating income
recurring/revenue.
Operating income recurring in the Americas reached
670 million euros, an increase of +55.5%.
Excluding energy impact, the operating margin was 16.1%, which
represented a -360 basis point decrease. This ratio
reflected the change in business mix following the acquisition of
Airgas with reinforcement of the relative weight of Industrial
Merchant.
Operating income recurring in Europe reached
637 million euros, almost unchanged at -0.3%.
Excluding energy impact, the operating margin stood at 19.3%,
representing a -50 basis point decrease compared with
H1 16. This result was in line with the change in business and
country mix of the zone.
Operating income recurring in the Asia-Pacific region
stood at 401 million euros, an increase of +16.3%.
Excluding energy impact, the operating margin was 20.0%, up +200
basis points. This increase was due to efficiencies and
adjustment plans implemented in the zone. It also benefited from
higher volumes in Industrial Merchant and the continued very
dynamic growth in Advanced Materials in Electronics.
Operating income recurring for Middle East and Africa
amounted to 53 million euros, an increase of
+19.3%. Excluding the energy effect, the operating margin
stood at 18.3%, an increase by +280 basis points,
driven by higher loading of the Yanbu production units in Saudi
Arabia.
Engineering & Construction
Operating income recurring for Engineering & Construction
stood at -6 million euros, penalized by a weak level of
activity in a challenging environment. The Group’s mid-term
operating margin target remains between 5% and 10%.
Global Markets & Technologies
Operating income recurring for Global Markets & Technologies
was 18 million euros and the operating margin was
10.6%, almost stable compared with H1 16 (10.8%). Some activities
are currently being launched. The margin level for this activity is
dependent on the nature of the projects carried out during the
period and may vary markedly from one year to the next.
Research and Development and Corporate Costs
Research and Development and Corporate Costs stood at
117 million euros and were stable compared with H1 16
(119 million euros).
NET PROFIT
Other operating income and expenses showed a net
balance of -2 million euros. This was mainly related to
costs for Airgas integration and expenses relating to alignment
plans currently underway, in particular in the United States. They
were much lower than in 2016 and were mostly offset by provision
reversals. In H2 17, the balance of other operating income and
expenses should be more negative.
The net financial expense of -259 million euros was
+51.6% higher than H1 16. Net finance costs at the end of
June 2017 stood at -223 million euros and were up +40.7%
excluding the currency impact, due to the financing of the Airgas
acquisition. The currency impact was a negative -10 million
euros, mainly related to the increase of the average rate of the US
dollar. At 3.1%, the average cost of net indebtedness
was down -40 basis points compared with H1 16, due to the
favorable impact of refinancing relating to Airgas. However, it was
up +20 basis points compared with the average cost for 2016
(2.9%), due to the increase in the cost of indebtedness in
developing countries. The increase in “other financial income and
expenses” (+88.6%) was mostly related to the increase in fees on
bank card payments with the consolidation of Airgas.
Taxes totaled 389 million euros, up +47.3% due to the
consolidation of Airgas. The effective tax rate was
27.9%. This was due to the new breakdown of the Group’s
businesses with a greater share in the United States where the tax
rate is higher, but also due to the decrease in tax rates in
several countries where the Group is present.
The share of profit of associates was 1 million
euros compared with 3 million euros in H1 16.
Minority interests rose by +14.9% to 49 million
euros, due to an increase in earnings for subsidiaries with
minority shareholders, notably in Saudi Arabia.
Net result from discontinued operations stood at
-30 million euros, the Group having made a provision
for the impact of the disposal of Air Liquide Welding which should
be completed on July 31st, 2017, as both parties have now obtained
the necessary regulatory approvals to finalize the disposal
project.
Net profit (Group share) amounted to 928 million
euros in H1 17, an increase of +14.5%.
Net earnings per share, at 2.40 euros, were up
+4.3% compared with H1 16, after taking into account
the impact of the October 2016 capital increase and thus had a
solid accretive impact. The average number of outstanding shares
used for the calculation of net earnings per share as at
June 30, 2017 was 386,833,119.
Change in the number of shares
H1 2016 H1 2017
Average number of outstanding shares (a)
352,569,431 386,833,119
(a) Used to calculate net earnings per
share. The average number of outstanding shares in H1 2016 was
restated for the impact of the preferential subscription rights
allocated to shareholders as part of the capital increase carried
out in October 2016.
Change in Net Indebtedness
Cash flow from operating activities before changes in working
capital amounted to 1,947 million euros. This
amount corresponded to a high level of sales (18.9%).
Net cash after changes in working capital requirement (and
other items) was 1,593 million euros, a marked
increase of +31.2% compared with H1 16, exceeding sales
growth of +28.4%.
The increase in working capital requirement (WCR) was
limited to 317 million euros, compared with
335 million euros in H1 16. The working capital
requirements ratio to sales, excluding taxes, remained stable at
9.0% compared with 9.1% at June 30, 2016. That
ratio for Gas & Services declined, from 11.2% at
June 30, 2016 to 9.1% at the end of H1 17.
This decrease is mainly due to a reduction in trade receivables
notably through an improvement of payment conditions for certain
customers and factoring measures. Engineering & Construction
WCR increased due to the cycle of projects.
Gross industrial capital expenditure reached
1,108 million euros, an increase of only +5.0%
despite the integration of Airgas. Financial investments totaled
86 million euros, slightly higher than the 76 million
euros made in H1 16 excluding the Airgas acquisition. Gross
capital expenditure in H1 17 amounted to 1,194 million
euros. Including transactions with minority shareholders and
proceeds from the sale of assets of 36 million euros, net
capital expenditure totaled 1,162 million euros and
represented 11.3% of sales, in line with the NEOS strategic
plan.
Net indebtedness at June 30, 2017 reached
15,610 million euros, slightly more (+1.6%) than at
December 31, 2016. Dividends were higher due to the
October 2016 capital increase; share buy-backs increased to
offset stock options exercised and performance shares granted. The
net debt to equity ratio, adjusted for the seasonal effect
of the dividend payment and excluding the currency impact, remained
stable at 90%.
The return on capital employed after tax (ROCE) was
7.4%, an improvement of 50 basis points compared with
adjusted ROCE of 6.9% at the end of 2016.
INVESTMENT CYCLE
The Group’s steady long-term growth is largely due to its
ability to invest in new projects each year. Investment projects in
the industrial gas business are spread throughout the world, highly
capital intensive and supported by long-term contracts, in
particular for Large Industries.
INVESTMENT OPPORTUNITIES
At the end of June 2017, the 12-month portfolio of
opportunities totaled 2.1 billion euros and remained
stable compared with March 2017. New projects entering the
portfolio offset those signed by the Group, awarded to the
competition or delayed. The long-term portfolio, which includes all
projects including those which may be signed after the next 12
months, was strong and remained at between 4.5 and
5 billion euros.
More than half of the investment opportunities in the 12-month
portfolio are located in developing economies. Americas remain the
geography with the highest number of opportunities, closely
followed by Europe and then Asia. This breakdown of the portfolio
of opportunities is similar to the new breakdown of Group
sales.
Half of the investment opportunities correspond to projects with
investments of less than 50 million euros; a few projects are
greater than 100 million euros. The more modest size of
projects contributes to a better distribution of risk.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Industrial and financial investment decisions totaled
1.1 billion euros during the 1st half of 2017.
Industrial decisions accounted for more than 90% of that amount.
These include in particular the takeover of a site from a major
customer in China, a new nitrogen supply contract in Oman and a
contract for a new electronics production unit in China.
The total investment backlog amounted to 2.0 billion
euros and was stable compared with the end of March 2017.
The investment backlog should represent a future contribution to
annual sales of approximately 0.8 billion euros per year after
full ramp-up.
START-UPS
Nine new production units were started up during the
1st half of 2017, including two air gas units in the Americas,
two in Europe, two hydrogen-related units and three dedicated to
Electronics in Asia.
Over the half-year, the contribution to sales of unit start-ups
and ramp-ups totaled approximately 70 million
euros.
A greater number of start-ups is expected during the second half
of the year. However, the Chinese project whose start-up was
scheduled for September 2017 is expected to extend its testing
period until the beginning of 2018.
Thus, for 2017 as a whole, the contribution to sales of unit
start-ups and ramp-ups should reach 170 to
190 million euros. This contribution is expected to be
higher in 2018, above 370 million euros, as several
major unit start-ups are scheduled for the end of 2017 and the
1st half of 2018.
RISK FACTORS
There was no change in risk factors during first half 2016. Risk
factors are described in the 2016 Reference Document on pages 28 to
33.
2017 OUTLOOK
The Group's performance in the first half of 2017 was
solid, with further growth in revenue and net profit, as well as an
improvement in the operating margin. Sales benefited from the end
of the Airgas consolidation effect and positive currency and energy
impacts.
The Gas & Services business continued to improve
during the first half of the year, benefiting from the
confirmed recovery in Industrial Merchant, strong volumes in Large
Industries, a good underlying level of activity in Electronics, and
continuous development in Healthcare. Global Markets &
Technologies sales continued to grow by double digits.
Geographically, all regions are generating growth, with Industrial
Merchant and Healthcare activities particularly dynamic in
developing economies.
The Group's operational performance also improved further in the
first half of 2017: the new efficiencies and synergies
associated with Airgas contributed to the higher operating margin
and net profit. Lastly, the Group's balance sheet remains robust,
benefiting from strong growth in cash flows and well controlled
debt.
Investment decisions continued during the first half of the
year, and the Group can rely on €2.0 billion investment
backlog to support its future growth. With Airgas now fully
integrated, Air Liquide is focused on executing its mid-term
strategic plan.
Assuming a comparable environment, Air Liquide is confident in
its ability to deliver net profit growth in 2017.
APPENDIX
Currency, energy and significant scope impacts
(Semester)
Applied method
In addition to the comparison of published figures, financial
information is given excluding significant scope, currency, and
natural gas and electricity price fluctuation impact.
- The significant scope effect
corresponds to the impact on sales of all acquisitions or disposals
of a significant size for the Group. These changes in scope of
consolidation are determined:
- for acquisitions during the period, by
deducting from the aggregates for the period the contribution of
the acquisition,
- for acquisitions during the previous
period, by deducting from the aggregates for the period the
contribution of the acquisition between January 1 of the current
period and the anniversary date of the acquisition,
- for disposals during the period, by
deducting from the aggregates for the previous period the
contribution of the disposed entity as of the anniversary date of
the disposal,
- for disposals during the previous
period, by deducting from the aggregates for the previous period
the contribution of the disposed entity.
- Since industrial and medical gases are
rarely exported, the impact of currency fluctuations on activity
levels and results is limited to euro translation impacts with
respect to the financial statements of subsidiaries located outside
the euro zone. The currency effect is calculated based on the
aggregates for the period converted at the exchange rate for the
previous period.
- In addition, the Group passes on
variations in the cost of energy (electricity and natural gas) to
its customers via indexed invoicing integrated into their medium
and long-term contracts. This indexing can lead to significant
variations in sales (mainly in the Large Industries Business Line)
from one period to another depending on fluctuations in prices on
the energy market.
- An energy impact is calculated based on
the sales of each of the main subsidiaries in Large Industries.
Their consolidation allows the determination of the energy impact
for the Group as a whole. The foreign exchange rate used is the
average annual exchange rate for the year N-1Thus, at the
subsidiary level, the following formula provides the energy impact,
calculated for natural gas and electricity respectively:Energy
impact = Share of sales index to energy year (N-1) x (Average
energy price over the year (N) - Average energy price over the year
(N-1))Neutralizing the impact of variations in energy prices
against sales allows analysis of evolution in revenue on a
comparable basis.
(in millions of euros)
Group
Gas & Services
H1 2017 Revenue
10,293
9,978
2017/2016 published change (in %)
+28.4%
+31.0%
Currency impact
166
166
Natural gas impact
179
179
Electricity impact
42
42
2017/2016 comparable growth (in
%)
+1.8%
+2.8%
Currency, energy and significant scope impacts
(Quarter)
In addition to the comparison of published figures, financial
information for second quarter 2016 is provided before currency,
energy price fluctuations and significant scope impacts. As of
January 1, 2015, the energy impact includes impacts of natural gas
and electricity. In the future, it may also include other energy
Large Industries feedstocks.
Since gases for industry and health are rarely exported, the
impact of currency fluctuations on activity levels and results is
limited to euro translation impacts with respect to the financial
statements of subsidiaries located outside the Euro zone.
Fluctuations in natural gas and electricity prices are passed on to
customers through price indexation clauses.
Consolidated 2017 second quarter revenue includes the following
impact:
(in millions of euros)
Revenue Q22017
Q2 2017/2016Change
Currency Natural gas
Electricity
Q2
2017/2016Comparablechange (a)
Group 5,117 +19.5% 49 75 17
+2.0% Gas and Services 4,932 +21.2% 50
75 17 +2.7%
(a) Comparable change based on 2016
adjusted sales excluding currency and energy impacts.
For the Group,
- The currency impact was +1.0%.
- The impact of natural gas price
fluctuations was +1.5%.
- The impact of electricity price
fluctuations was +0.4%.
For Gas & Services,
- The currency impact was +1.1%.
- The impact of natural gas price
fluctuations was +1.6%.
- The impact of electricity price
fluctuations was +0.4%.
2nd quarter 2017 revenue
BY GEOGRAPHY
Revenue
(in millions of euros)
Q2 2016 Q2 2017
Publishedchange
Comparablechange
(a)
Americas 1,361 2,109 +54.9%
+2.9% Europe 1,611 1,661 +3.2% +1.5%
Asia-Pacific 954 1,008 +5.7% +4.0%
Middle-East & Africa 144 154 +6.8%
+4.3%
Gas & Services Revenue 4,070
4,932 +21.2% +2.7% Engineering
& Construction 130 93 -28.8% -29.1%
Global Markets & Technologies 81 92 +13.3%
+14.1%
GROUP REVENUE 4,281
5,117 +19.5% +2.0%
BY WORLD BUSINESS LINE
Revenue
(in millions of euros)
Q2 2016 Q2 2017
Publishedchange
Comparablechange
(a)
Large industries 1,181 1,302 +10.3%
+1.8% Industrial Merchant 1,726 2,373
+37.5% +3.1% Healthcare 756 840 +11.1%
+3.5% Electronics 407 417 +2.4%
+1.2%
GAS & SERVICES REVENUE 4,070
4,932 +21.2% +2.7%
(a) Comparable change based on adjusted
2016 sales excluding currency and energy impacts.
Segment information
H1 2016 H1 2017 (in millions of
euros and %)
Revenue
Operatingincomerecurring
OIR margin Revenue
Operatingincomerecurring
OIR margin Americas
2,185.3 431.2 19.7% 4,250.7
670.3 15.8% Europe 3,224.4 638.4 19.8%
3,371.2 636.5 18.9% Asia-Pacific
1,919.7 344.8 18.0% 2,032.6 400.9
19.7% Middle-East and Africa 288.1 44.5
15.5% 323.8 53.1 16.4%
Gas and Services
7,617.5 1,458.9 19.2%
9,978.3 1,760.8 17.6%
Engineering and Construction 254.3 10.8 4.2%
145.8 (5.6) -3.9% Global Markets and
Technologies 145.7 15.8 10.8% 168.6
17.9 10.6% Reconciliation - (118.8)
- - (117.0) -
TOTAL GROUP
8,017.5 1,366.7 17.0%
10,292.7 1,656.1 16.1%
The operating margin (OIR to revenue) was up +30 basis points on
a comparable basis at 16.1% compared with H1 16 adjusted operating
margin. Excluding the energy impact, H1 17 operating margin
was up +70 basis points at 16.5% compared to the adjusted H1
16 operating margin and in line with the Group’s objective to
improve profitability.
Consolidated income statement
Considering the disposal of Aqua Lung as announced on 30
December 2016, and the on-going divestment of its subsidiary
Air Liquide Welding (communicated on
15 December 2016, last press release on
27 April 2017),“Other activities” have been reallocated
to “Net Profit from Discontinued Operations” in the 2016 and 2017
Income Statement, in accordance with IFRS 5.
In the same manner, “Other activities” have been reallocated to
“Assets held for sale” and “Liabilities held for sale” on the
balance sheet.
(in millions of euros)
1st Half 2016
aspublished
1st Half
2016restated (a)
1st Half 2017 Revenue
8,294.6 8,017.5 10,292.7
Other income 62.2 60.3 58.6 Purchases
(3,056.6) (2,924.6) (3,907.9) Personnel expenses
(1,655.9) (1,586.5) (2,098.4) Other expenses
(1,538.2) (1,482.0) (1,788.5)
Operating
income recurring before depreciation and amortization
2,106.1 2,084.7 2,556.5
Depreciation and amortization expense (724.5) (718.0)
(900.4)
Operating income recurring
1,381.6 1,366.7 1,656.1 Other
non-recurring operating income 12.3 12.3 (0.3)
Other non-recurring operating expenses (101.6) (96.7)
(1.4)
Operating income 1,292.3
1,282.3 1,654.4 Net finance costs
(153.8) (151.7) (222.9) Other financial income
11.2 11.0 11.3 Other financial expenses (32.1)
(30.3) (47.7) Income taxes (268.2)
(264.0) (388.8) Share of profit of associates 3.6
3.3 0.6
NET PROFIT FROM CONTINUING OPERATIONS
853.0 850.6 1,006.9
NET RESULT FROM DISCONTINUED OPERATIONS -
2.4 (30.4) PROFIT FOR THE PERIOD
853.0 853.0 976.5 ■
Minority interests 42.4 42.4 48.7 ■ Net profit
(Group share)
810.6 810.6
927.8
Basic earnings per share (in euros)
(b)
2.30 2.30 2.40 Diluted
earnings per share (in euros)
2.29
2.29 2.39
Basic earnings per share from continuing
operations (in euros)
2.30 2.29
2.48 Diluted earnings per share from continuing
operations (in euros)
2.29 2.28
2.47
Basic earnings per share from discontinued operations (in
euros)
- 0.01 (0.08)
Diluted earnings per share from discontinued operations (in
euros)
- 0.01 (0.08)
(a) 1st half 2016 restated
applying the IFRS 5 as mentioned above.
(b) Used to calculate net earnings per
share. The average number of outstanding shares in H1 2016 was
restated for the impact of the preferential subscription rights
allocated to shareholders as part of the capital increase carried
out in October 2016.
Consolidated balance sheet
ASSETS (in millions of euros)
December 31, 2016 June 30, 2017
Goodwill 13,889.5 13,298.7 Other intangible assets
1,887.4 1,749.4 Property, plant and equipment
20,115.7 19,156.1
Non-current assets
35,892.6 34,204.2 Non-current financial assets
584.0 619.1 Investments in associates 134.2
122.2 Deferred tax assets 181.9 238.5 Fair
value of non-current derivatives (assets) 60.1 67.3
Other non-current assets 960.2
1,047.1 TOTAL NON-CURRENT ASSETS
36,852.8 35,251.3 Inventories and
work-in-progress 1,323.1 1,361.9 Trade receivables
3,115.0 3,124.1 Other current assets 697.5
746.9 Current tax assets 277.4 102.0 Fair
value of current derivatives (assets) 53.2 48.0 Cash
and cash equivalents 1,523.0 895.0
TOTAL CURRENT
ASSETS 6,989.2 6,277.9 ASSETS
HELD FOR SALE 275.8 277.4 TOTAL
ASSETS 44,117.8 41,806.6
LIABILITIES (in millions of euros)
December 31,
2016 June 30, 2017 Share capital
2,138.8 2,135.2 Additional paid-in capital
3,103.3 3,017.2 Retained earnings 9,767.4
9,739.4 Treasury shares (111.7) (143.3) Net profit
(Group share) 1,844.0 927.8
Shareholders'
equity 16,741.8 15,676.3
Minority interests 383.2 372.7
TOTAL EQUITY 17,125.0 16,049.0
Provisions, pensions and other employee benefits 2,592.4
2,461.8 Deferred tax liabilities 2,378.2
2,248.8 Non-current borrowings 14,890.1 13,914.6
Other non-current liabilities 270.6 233.0 Fair value
of non-current derivatives (liabilities) 233.7 48.7
TOTAL NON-CURRENT LIABILITIES 20,365.0
18,906.9 Provisions, pensions and other employee benefits
279.5 251.3 Trade payables 2,485.9
2,283.8 Other current liabilities 1,473.3 1,332.8
Current tax payables 144.3 148.2 Current borrowings
2,001.0 2,590.5 Fair value of current derivatives
(liabilities) 63.0 85.3
TOTAL CURRENT
LIABILITIES 6,447.0 6,691.9
LIABILITIES HELD FOR SALE 180.8
158.8 TOTAL EQUITY AND LIABILITIES
44,117.8 41,806.6
Consolidated cash flow statement
(in millions of euros)
1st Half 2016
aspublished
1st Half 2016 (a)
1st Half 2017 Operating
activities Net
profit (Group share) 810.6 810.6
927.8 Minority interests 42.4
42.4 48.7 Adjustments:
● Depreciation and amortization
724.5 724.5 903.9 ● Changes in deferred taxes
42.7 42.7 71.3 ● Increase (decrease) in provisions
(29.6) (29.6) (79.3) ● Share of profit of
associates - - 2.4 ● Profit/loss on disposal
of assets (16.1) (16.1) 19.9 ● Net finance
costs related to the acquisition of Airgas - 22.1
52.5
Cash flows from operating activities before
changes in working capital 1,574.5
1,596.6 1,947.2 Changes in working capital
(335.0) (335.0) (316.5) Others (46.8)
(46.8) (37.2)
Net cash flows from operating
activities 1,192.7 1,214.8
1,593.5 Investing activities
Purchase of property, plant and equipment and
intangible assets (1,054.9) (1,054.9)
(1,107.8) Acquisition of consolidated companies and financial
assets (12,099.7) (12,099.7) (85.8) Proceeds
from sale of property, plant and equipment and intangible assets
49.4 49.4 32.9 Proceeds from sale of financial
assets 0.3 0.3 3.0
Net cash flows used in
investing activities (13,104.9)
(13,104.9) (1,157.7) Financing
activities Dividends
paid ● L'Air Liquide S.A.
(946.7) (946.7) (1,061.7) ● Minority interests
(48.5) (48.5) (41.2) Proceeds from issues of
share 102.7 102.7 26.9 Purchase of treasury
shares (0.1) (0.1) (158.4) Increase (decrease)
in borrowings 13,072.4 13,050.3 138.5
Transactions with minority shareholders (0.5) (0.5)
(4.4)
Net cash flows from (used in) financing
activities 12,179.3 12,157.2
(1,100.3) Effect of exchange rate changes and change in
scope of consolidation 60.5 60.5 (23.1)
Net
increase (decrease) in net cash and cash equivalents
327.6 327.6 (687.6) NET CASH
AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
875.4 875.4 1,430.5 NET CASH
AND CASH EQUIVALENTS AT THE END OF THE PERIOD
1,203.0 1,203.0 742.9
(a) The 1st half of 2016 cash flow
statement has been restated in compliance with IAS 8 to
include the restatement of Airgas net finance costs.
The analysis of net cash and cash equivalents at the end of
the period is as follows:
(in millions of euros)
June 30,
2016 December 31, 2016 June 30,
2017 Cash and cash equivalents 1,315.8
1,523.0 895.0 Bank overdrafts (included in current
borrowings) (112.8) (92.5) (152.1)
NET CASH
AND CASH EQUIVALENTS 1,203.0
1,430.5 742.9
Net indebtedness calculation
(in millions of euros)
June 30,
2016 December 31, 2016 June 30,
2017 Non-current borrowings (long-term debt)
(11,101.8) (14,890.1) (13,914.6) Current borrowings
(short-term debt) (10,073.8) (2,001.0)
(2,590.5)
TOTAL GROSS INDEBTEDNESS (21,175.6)
(16,891.1) (16,505.1) Cash and cash
equivalents 1,315.8 1,523.0
895.0
Derivative instruments (assets) - fair
value hedge ofborrowings
- - -
Derivative instruments (liabilities) -
fair value hedge ofborrowings
- - -
TOTAL NET INDEBTEDNESS AT THE END OF
THE PERIOD (19,859.8) (15,368.1)
(15,610.1)
Statement of changes in net indebtedness
(in millions of euros)
June 30, 2016
aspublished
June 30, 2016 (a)
December 31,2016
June 30, 2017 Net indebtedness at the
beginning of the period (7,238.7)
(7,238.7) (7,238.7) (15,368.1)
Net cash flows from operating activities 1,192.7
1,214.8 3,696.5 1,593.5 Net cash flows used in
investing activities (13,104.9) (13,104.9)
(13,594.3) (1,157.7)
Net cash flows used in financing
activities excludingincrease (decrease) in borrowings
(893.1) (893.1) 2,331.5 (1,238.8)
Total net cash flows (12,805.3)
(12,783.2) (7,566.3) (803.0)
Effect of exchange rate changes, opening
net indebtednessof newly acquired companies and others
184.2 162.1 (563.1) 561.0
Change in
net indebtedness (12,621.1)
(12,621.1) (8,129.4) (242.0)
NET INDEBTEDNESS AT THE END OF THE PERIOD
(19,859.8) (19,859.8) (15,368.1)
(15,610.1)
(a) The 1st half of 2016 cash flow
statement has been restated in compliance with IAS 8 to
include the restatement of Airgas net finance costs.
Revenue and adjusted 2016 Operating Income Recurring
Adjusted 2016 revenue and operating income recurring are
computed as if, on January 1, 2016, Airgas had been fully
consolidated and the divestitures requested by the U.S Federal
Trade Commission completed, and Aqua Lung and
Air Liquide Welding had been deconsolidated.
(in millions of euros)
1st
Half 2016 2016 Revenue 9,734
19,812 Operating income recurring before depreciation and
amortization 2,401 4,916 Operating income recurring
1,543 3,189 Operating Margin (a) 15.8%
16.1%
(a) Operating Income Recurring/Revenue
The adjusted 2016 sales figures are reposted hereunder in order
to provide a 2016 comparable basis:
Adjusted 2016 Sales
(in millions of euros)
Q1 2016 Q2 2016 Q3 2016
Q4 2016 2016 Group 4,857
4,877 4,922 5,156 19,812 Gas & Services
4,668 4,666 4,744 4,930 19,008
Industrial Merchant 2,261 2,271 2,270
2,293 9,095 Healthcare 792 807 813
846 3,258
Americas 1,944
1,957 2,003 2,003 7,907 IM Americas
1,381 1,370 1,381 1,369 5,501
Healthcare Americas 181 186 191 188
746
NB: the figures not shown here above correspond to the published
figures and are not concerned by the adjustment from the Airgas
acquisition.
Return on Capital Employed – ROCE
Applied method
Return on capital employed after tax is calculated based on the
Group’s consolidated financial statements, by applying the
following ratio for the period in question:
For the numerator: net profit - net finance costs after taxes
for the period in question.
For the denominator: the average of (total shareholders' equity
+ net indebtedness) at the end of the past three half-years.
The adjusted 2016 ROCE taking into account the
acquisition of Airgas for the full year 2016 reached 6.9%.
Hence, the ROCE at end of June 2017 increased +50 bps
to adjusted 2016 ROCE.
ROCE H1 2017 H1
2016 2016 H1 2017
ROCECalculation
(in millions of euros)
(a) (b)
(c) Numerator
((b)-(a))+(c)
Net profit after tax before deduction of minority interests
853.0 1,926.7 976.5 2,050.2 Net finance costs
-151.7 -389.1 -222.9 -460.3 Group
effective tax rate 23.8% 28.2% 27.9% -
Net financial costs after tax -115.7 -279.4
-160.8 -324.5
Net profit after tax before deduction
of minority interests - Net financial costs after
tax
968.7 2,206.1 1,137.3
2,374.7
Denominator
((a)+(b)+(c))/3
Total equity 12,329.7 17,125.0 16,049.0
15,167.9 Net indebtedness 19,859.8 15,368.1
15,610.1 16,946.0
Average of (total equity + net
indebtedness)
32,113.9 ROCE
7.4% ROCE H1 2016
H1 2015 2015 H1 2016
ROCECalculation
(in millions of euros)
(a) (b)
(c) Numerator
((b)-(a))+(c)
Net profit after tax before deduction of minority interests
888.6 1,838.7 853.0 1,803.1 Net finance costs
-121.7 -227.1 -151.7 -257.1 Group
effective tax rate 29.2% 26.8% 23.8% -
Net financial costs after tax -86.2 -166.2
-115.7 -195.8
Net profit after tax before deduction
of minority interests - Netfinancial costs after tax
974.8 2,004.9 968.7
1,998.9
Denominator
((a)+(b)+(c))/3
Total equity 12,150.8 12,770.8 12,329.7
12,417.1 Net indebtedness 7,926.6 7,238.7
19,859.8 11,675.0
Average of (total equity + net
indebtedness)
24,092.1 ROCE
8.3%
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Air LiquideCorporate CommunicationsAnnie Fournier,
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